A joint and survivor annuity is a type of annuity that is purchased by a number of people, typically a husband and wife. It continues to yield an income as long as one of those people are alive. The idea behind taking a joint and survivor annuity is to ensure that the partner who happens to outlive the other receives a reliable income after the death of the other partner. There is no need for the annuity to be passed to the other partner with a will, because they both own the investment.
How Joint and Survivor Annuities Work
The money that you pay to the insurance company for the annuity is usually invested in a diversified portfolio of financial instruments and it is the earnings from these investments which continue to be paid to the annuitants who are alive.
Joint and survivor annuities fall into the category of annuities referred to as life annuities, which are annuities that continue to pay to the annuitants as long as one of the annuitants is alive. This is in contrast to other types annuities that only pay out for a predetermined period of time, no matter how long the annuitant lives.
Joint and survivor annuities come in varieties. Some continue to give full payments for the life of the annuity and some reduce the amount of the payments after the death of one annuitant.
When All Annuitants Die Together
Many joint and survivor annuities also make provisions for what should happen in the relatively rare situation where both annuitants die together. In this respect, some joint and survivor annuities will pay an amount equal to the principal of the annuity (even if the annuitants premiums happen to have surpassed the principal) in installments to yet another beneficiary, whereas others will simply pay a lump-sum equal to the principal of the annuity to the beneficiary or into the estate of the deceased.
